India's largest oil and gas producer ONGC will this year reverse years of decline in production and gradually raise output thereafter, as it invests billions of dollars to produce from newer discoveries, a top company official said.
Oil and Natural Gas Corporation (ONGC) in fiscal 2021-22 produced 21.707 million tonne of crude oil, which is refined to produce petroleum products such as petrol and diesel, and 21.68 billion cubic metre (bcm) of natural gas, which is used to produce electricity, manufacture fertilizer and as CNG in automobiles.
"We are definitely looking forward to increasing production of oil and gas in 2023-24 and even in the current year," ONGC chairman Arun Kumar Singh told PTI.
In the current fiscal year (2022-23), crude oil production is slated to rise to 22.823 million tonnes and gas to 22.099 bcm. In the following fiscal year, oil production will climb to 24.636 million tonnes and 25.689 million tonnes in 2024-25.
Natural gas production is slated to rise to 25.685 bcm in 2023-24 and 27.529 bcm in the following year. ONGC, which contributes around 71% to India's domestic production, has reported a gradual decline in output for over a decade now primarily because its fields are old and ageing.
The government has considered giving away ONGC's biggest oil and gas fields to private and foreign companies in an attempt to boost output but this has faced internal resistance. Mr. Singh said the company is open to partnerships in technical difficult fields.
ONGC is investing ₹59,000 crore in 20 major projects, including in bringing to production oil and gas reserves found in deep sea KG block KG-DWN-98/2 (KG-D5) and the fourth phase redevelopment of mainstay Mumbai High fields.
While investment in KG-D5 will bring additional output, spending on the redevelopment of currently producing Mumbai High- and other fields would help arrest the natural decline that has set in the ageing fields.
The company will hook up a floating production system (FPSO) and subsea facilities soon. The first oil from KG-D5 is expected in May 2023 and a peak output of 45,000 barrels per day of gas (2.25 million tonnes annually) and about 12 million standard cubic metres per day of gas will be in 2024-25. The block is likely to yield 1.935 million tonnes of oil and 2.784 bcm of gas in 2023-24.
Mr. Singh said ONGC will continue to invest around ₹30,000 crore per year on capital expenditure, aimed at arresting the decline in output and subsequently increasing it. The capex spend will not be impacted by the levy of windfall profit tax on domestically produced crude oil.
The levy is triggered on any price over and above $75 per barrel, a rate good enough for ONGC to keep spending on finding and producing oil and gas in the coming years. The firm has a little less than 600 hydrocarbon discoveries. Most of them were either in production or action had been initiated to monetise them.
The roadmap for increasing output addresses monetisation plans of all the discoveries of ONGC, barring about 42 finds, which are isolated/far from existing infrastructure or have very low volumes or are located in difficult areas.